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Mexico Ends "Chocolate Cars" Regularization Program

Overview of the Program’s Termination

Mexico’s federal government has officially announced the conclusion of the program aimed at regularizing “chocolate cars,” a term that refers to used vehicles imported illegally from the United States and Canada. This significant policy shift has garnered considerable approval from the automotive industry, which has long claimed that the program distorted the competitive landscape and stimulated contraband activities. The cessation of this initiative was formalized through a decree published in the Official Gazette of the Federation (DOF).

Reversal of Previous Extensions

The repeal of this regularization program also overrules a previous measure enacted in November, which had extended the program’s validity to December 2026. This effectively dismantles a framework that was first introduced in 2022 under the leadership of former President Andrés Manuel López Obrador. According to the latest available data from the Public Vehicle Registry, the initial program had enabled the regularization of approximately 2.99 million vehicles as of November 25, 2025.

Industry Perspectives and Reactions

Guillermo Rosales, the President of the Mexican Association of Automotive Dealers (AMDA), expressed his approval of the government’s decision, citing that the repeal will bring stability to the domestic market and facilitate a more orderly process for the entry of used vehicles. AMDA has previously voiced severe critiques of the program, arguing it led to an influx of older vehicles that failed to meet the country’s import, safety, and emissions regulations. The association further contended that the scheme had fostered corruption, facilitated smuggling, and inundated the formal market with low-value units, consequently undermining both new and used vehicle sales.

Impact on the Used Vehicle Market

Critics also highlight that the regularization program inadvertently had dire repercussions on the used car market, particularly in northern regions of Mexico. For instance, in Chihuahua, new vehicle sales experienced a 4.5% decline in 2024, contrasting sharply with a national growth rate of 10.6%, as reported by AMDA. Sinaloa similarly recorded a 4.7% drop in sales, with Baja California and Tamaulipas following suit with weaker performance metrics.

Rosales emphasized that such declines were not coincidental, noting that regions with a high prevalence of regularized chocolate cars experienced more significant downturns in formal sales, even against a backdrop of robust local economies and near-total employment. AMDA has also issued warnings about the broader societal impacts stemming from the proliferation of irregular vehicles, such as lost tax revenues, insufficient oversight of importers potentially engaging in money laundering activities, and increased environmental costs due to noncompliant emissions.

Regulatory Changes Post-Repeal

In light of the repeal, the importation of used vehicles will now be strictly regulated under the United States-Mexico-Canada Agreement (USMCA). This agreement imposes constraints on vehicle age and mandates conformity with mechanical and emissions standards, aiming to improve both public safety and environmental integrity.

Market Performance amidst Policy Shifts

The timing of this policy change aligns with a complex set of signals emanating from Mexico’s light vehicle market. While monthly sales figures showed weaknesses at various points throughout 2025, cumulative sales from January through November did record a modest increase of about 1% year-on-year. Projections indicate that total sales could reach approximately 1.6 million units for the year.

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